Hello everyone, thank you for your patience. Welcome to the MP Materials Fourth Quarter 2021 Financial Results Conference Call and Webcast. My name is Daisy, and I’ll be coordinating today’s call. You will have the opportunity to ask question at the end of the presentation. I’ll now hand over to our host, Martin Sheehan, the Head of Investor Relations from MP Materials. So Martin, please go ahead.

Thank you, operator, and good day, everyone. Welcome to MP Materials fourth quarter 2021 earnings call. With me today are Jim Litinsky, Chairman and Chief Executive Officer of MP Materials; Michael Rosenthal, Chief Operating Officer; and Ryan Corbett, Chief Financial Officer. Before we get to Jim’s, Michael’s and Ryan’s opening remarks, as a reminder, today’s discussion will contain forward-looking statements relating to future events and expectations that are subject to various assumptions and caveats. Factors that may cause the company’s actual results to differ materially from these statements are included in today’s presentation, earnings release, and in our SEC filings. In addition, we have included some non-GAAP financial measures in this presentation. Reconciliations to the most directly comparable GAAP financial measures can be found in the appendix to today’s presentation and earnings release. Any reference to our discussion today to EBITDA means adjusted EBITDA. Finally, the earnings release and slide presentation are available on our website. With that, I’ll turn the call over to Jim. Jim?

Thanks, Martin, and thank you to everyone joining us this afternoon. I assume many of you saw or heard about the White House event on Tuesday announcing our new partnership with the Department of Defense. That was a really special day for all of us at MP Materials. So on behalf of the entire team, I wanted to, again, thank the President, the Department of Defense and the State of California for all their confidence and support in us, as we continue to execute on our mission to restore the full rare supply chain to the United States. It was a very busy quarter and year, and we have a lot of exciting things to discuss today. First, I will recap the highlights of a remarkable year. I will then provide some more detail on our December announcement regarding our initial Stage 3 magnetics facility and our agreement with General Motors. Next, Michael and I will cover our plans regarding our heavy, rare earth’s expansion and give an update on Stage 2 process flow. Then Ryan will summarize our financial performance, provide color on the new S-K 1300 reserve report and discuss our upcoming investment in operating expectations. That would be remiss if I did not address the short reports. So I will do that before wrapping it up with some closing thoughts. After that, we’ll open it up for Q&A. So let’s start with Slide 4. Here is a summary of some of our major accomplishments in 2021 and year-to-date. MP has an execution focused owner operator culture, and I think our outstanding results demonstrate that. We produced over 42,000 metric, tons of rare earth oxides in concentrate. This represents the highest production in the 70-year history of Mountain Pass and the highest primary production in U.S. history. This…

Thanks, Jim. I’d like to start by saying that I couldn’t agree more with how exciting the heavy rare earth opportunity is for us. I’d also like to acknowledge our engineering, analytical maintenance and project teams with a significant work that went into this analysis and design. I’d also like to thank the Department of Defense for its support of our project in helping spearhead the government’s effort into securing this critical supply chain in the United States. When we initially conceived the Stage 2 flow sheet, which is included on Slide 7, we had anticipated heavy rare earth separation being a longer-term possibility. However, as our strategy for Stage 3 magnetics became more clearly defined and as our magnet recycling capability in support of this project and long-term environmental sustainability has progressed. The necessity and attractiveness of HREE separation something’s called SEG+ plus separation. That’s become more apparent. You can see a simplified depiction of where the heavy rare circuit will fit into the flow on the bottom of the slide. As Jim mentioned, certain HREE namely terbium and dysprosium add key functionality to high end magnetic. Our Stage 3 operation and third-party customer are interested in a stable domestic source of these elements in the same way they’re eager for NdPr. Magnet recycling is a critical component of metal and magnet manufacturing. The U.S. must have both capabilities. Send magnets or metal and magnet facility process waste contains NdPr along with terbium and dysprosium in many cases. For process waste a lot of cost was sunk into that material before it fell out of the process. Therefore, the waste must be turned back into a valuable commodity. To do so, the elements in some cases must be re-separated. Therefore, heavy rare earth separation becomes even more intricately to…

Thanks, Michael. As Jim already hit on the highlights, I will quickly go over our annual results starting on Slide 10. In 2021, we saw modest improvements on all of the key inputs and our production growth algorithm, uptime, feed rates, and recoveries all improved compared to 2020, resulting in a 10% increase in total rare earth production. You can see on the bottom left compared to 2019, production is up over 50%. Obviously from here, incremental improvements get more challenging, but Michael and the team continue to focus on making thoughtful improvements to continually drive higher volumes, which we expect will primarily come through improved mineral recoveries. On the top left, you’ll see that we continue to ship virtually everything we produce, despite a very challenging shipping and logistics environment. Moving to the right, you can see the strong growth in pricing driven primarily by strong demand for our concentrate product due to the contained NdPr. I’ll discuss side a bit more later. Finishing up on the bottom right, you can see that production costs were up modestly versus last year, but when excluding about $140 per metric ton of Stage II pre-commissioning costs that hit the P&L. Production costs were actually down slightly year-over-year, despite the inflationary environment. Moving to Slide 11, Jim mentioned the strong revenue and adjusted EBITDA growth in the year, which you can see on the top two graphs. And on the bottom two, you can see the leverage we get from solid production and shipping with strong pricing demonstrated by 2021 adjusted EBITDA margin, nearly doubling to 66%. On the bottom right, you can see that much of our adjusted EBITDA flows through to adjusted net income. We believe these results show the power of our Mountain Pass sits on the cost curve.…

Thanks, Ryan. We are still on Slide 16 and I love this picture. Many of you have heard me say how proud we are that we wear the American flag on our sleeves. The mission we have taken on as important, disruptive and very challenging. We are also capitalists and we believe what we are doing is going to be very rewarding. Yet, for two quarters in a row, we and our shareholders have been the victim of drive by stock rate short seller statement. Sell side analyst and investors not taken in by misleading sound by its figured things out. But according to Bloomberg reporting, at least one of these parties appears to be involved in a United States Department of Justice probe around potential trading abuses and other crimes. So we take addressing this issue very seriously on behalf of our shareholders, many of whom are rightly very angry at those involved in producing these false and misleading short seller statements. First, I want to make clear that we respect honest, rigorous and thoughtfully researched short selling is a critical market function. Some of you already know this, but I ran a sizable hedge fund for nearly 15 years before returning my outside liquid capital. So I could focus full time on creating long-term shareholder value at MP. The reason I bring that up is that I think it is fair to say that I have the appropriate background to be able to delineate fundamental short selling from outright market manipulation and securities fraud. So let me address the fundamental claims raised about MP. And then I will give you some overall perspective in case this happens to us again. In a nutshell, the report claim that we engaged in a scheme with Shenghe or distributor to inflate…

Thank you very much. Our first question is from Tyler Langton from JPMorgan. Tyler Langton, please go ahead. Your line is open.

Good afternoon. Thanks for taking my question. I guess, maybe to start with sort of Stage II. I guess, could you provide a little bit more detail, I know you mentioned sort of obviously, Omicron and sort of labor shortage. But are there any, I guess, sort of key sort of processes or equipment that are sort of causing the delays?

No, I mean, I think that what we said pretty much speaks for itself that I think you’ve heard commentary around companies in the global economy of just the challenges this past quarter and anytime you have when things slip up, it can have ramifications with something else, but there’s nothing specific I would cite other than sort of what we said in the comments, Tyler.

Okay, that’s helpful. And then just on the CapEx front, the $700 million, is there – I guess, can you provide any sort of rough numbers in terms of what’s going to be directed towards Stage II for Fort Worth and recycling and then efficiencies?

No, I mean, I think so obviously, we talked a lot about it in the script, but we’re – essentially because we have all of these projects, we’re just – we’re transitioning to an overall CapEx number and we’re not breaking that out into individual projects. So, so sorry, I can’t help you on that front.

Okay. All right. That’s it. Thanks so much.

Yes, no problem.

Thank you. Our next question is from Matt Summerville from D.A. Davidson. Matt, your line is open. Please go ahead.

Excuse me. Thanks. Good evening. Couple of questions. First, with respect to Stage I output and potential outages you anticipate incurring in 2022. What would be a reasonable expectation for year-over-year growth in Stage I output? I guess, I’m trying to get a feel for how much moving forward you’re able to push the envelope on mineral recovery.

Hey, Michael, why don’t you take that one?

Sure. Thank you. As we said, we continue to work to improve the overall mineral recovery. And we think there’s still significant opportunity, although, the exact timing of how and when that materializes is difficult to predict. We continue to optimize our existing circuit and make adjustments and upgrades to make things better and better. We do expect probably to have some interruption from construction and tie-ins throughout the year, but I don’t think that would be terribly material. So overall, we think that uptime will be probably down slightly, but offset by the continued improvements you saw in the second half of the year, there was some improvement year-over-year and we think that has not all been reflected fully into the full run rate. Not sure if that answers your question.

Thanks. Yes. Yes. Thank you. That’s helpful. And then as my follow up question, I’m curious, as the offtake agreement comes to an end here this quarter, where the home might be for where you ultimately can begin to sell Stage I material before it’s obviously consumed in Stage II. Then similarly, I would be curious as to where geographically, you might be looking to source Stage II feed stock. Thank you. Third-party feed stock…

Ryan, why don’t you go ahead and cover that since you’ve covered script.

Yes. Matt, on that front, what I mentioned in the script is that, we do intend for the majority of the Stage I product that is being sold into the market to continue to distribute that through Shenghe. Even today, we do have direct customers that we sell our Stage I product two and we have the ability to do that, to the extent we so choose, but obviously, given the preponderance of refining capacity being in China and the ability for us to easily distribute with existing in place logistics. We do have an agreement on terms with Shenghe to continue distributing through them once the offtake is complete. We continue to see pretty strong demand directly from customers really, really far up the supply chain who want to have visibility to exactly where their materials are coming from. And so it is a good opportunity for us to continue to develop those direct relationships that we intend to leverage once we are into Stage II and selling separated products. So I think majority will continue to make their way to where the refining is in China, through Shenghe, but we continue to develop our own direct sales force as well. I don’t know, Jim, do you want to cover the third-party feed stock?

Yes, I think – sorry, what was the question again on third-party feed stock?

I was just curious where geographically, you would plan to potentially source that material and how much material could ultimately go through the Stage II process. I guess, at the end of the day, I’m curious as to what that 6,075 number looks like, if you’re not only processing even more concentrate than you maybe originally kind of guided to in the spec and now you’re also willing to take in third-party material.

Sure. So I can’t tell you specifically where because obviously I wouldn’t want to give up strategic advantage of the company in kind of negotiating and thinking about where and how we make future investments and whatnot. But I think to the heart of your question, it is – as we said today, when you look at the what we’ve outlined and you can go back to one of – to the slide where we kind of show you the whole process flow. The – our ability now to take third-party feed really allows us the ability to take, say, a carbonate from somewhere else in the world. And that can go somewhere into our process in a way that will give us additional lights and heavies. And so we also mentioned in the script that we have been sort of positioning and adjusting for that. And so I can’t – I’m not going to give you sort of a specific number, but I think it would be correct to assume that we will be able to do sort of more than we contemplated two years ago.

Understood. Thank you guys.

Sure.

Thank you. Our next question is from David Deckelbaum from Cowen. David, your line is open. Please go ahead.

Hey, David.

Thanks for the times. Hey guys. Thanks Jim, Ryan and Michael. Appreciate all the color tonight.

Sure.

I was hoping you maybe at a high level, the reserve report is obviously highly encouraging. You pointed out all the conservatism that you see in the report. And yet at the same time, you have 11 more effective economic years at 35 years. You guys have a lot on your plate right now. Stage II is taking on more complexity. You’re expanding in the Stage III, but if we get back to Stage I, how should we think about expansions? And is there correct mine life given how robust demand is growing right now that you’d like to kind of goal seek around their target over the next few years?

Sure. So great question. I’ll covered and maybe if Ryan or Michael want to chime in with additional thoughts. I think the way to think about it, I’ll start with – I’ll just step back high level. I think we may have said this on a prior call, but if you think about just the U.S. auto fleet as that goes from ice to electric. We probably needed for – just for our domestic auto fleet, three Mountain Passes. And that’s obviously leaving out sort of the rest of the world and all the other applications and growth that we’re going to see around electrification. So there’s no question there’s a lot more supply needed. Certainly, it makes sense to expand the potential output Mountain Pass vis-à-vis pretty much at least anything I see in the western world or frankly anywhere else in the world to expand what you said is our – sort of what our Stage I output is. And I would also say it’s also frankly helpful from an environmental standpoint in the sense that before you start doing a brand new mine with all of the impact that that could have with a much lower grade, worse economics, potentially other environmental challenges. It makes sense, frankly, from government stakeholders to want to see our site expanded. So I think we obviously have a strong economic issues and I also think government stakeholders have that interest. Yes, you also noted this in your question. We have a full plate of projects. And so as you can tell already at MP, we work on lots of parallel pads and we’re trying to move as quickly as we can while also getting things right. So I guess I would say to your question, it’s definitely something that is top of mind as far as top of mind, not mine as far as things we want to think of, but realistically, that is we have a lot to get done first. And so I would also just add if you look at the reserve report fund – you look at our cutoff grade and that’s above where the ore body, actual ore body grade is of a lot of other hope for projects. So there’s certainly a lot of – it makes a lot of economic sense for more a lot more to be done at Mountain Pass. But Ryan, Michael, do you want to cover anything on this question?

I think you hit it, Jim. The only thing I’d add is obviously, there are technologies out there that will continue to stare at to Jim’s point on the lower grade material that, that would allow us potentially to make some interesting changes to be able to leverage material that hasn’t even made it into the reserve at this point. But I agree with everything that Jim said, certainly with everything on our plate, we have been adding very capable teams in all of these areas. And this is one that will continue to look at doing the same thing.

I appreciate the responses to that. And then if I could just ask one more on the GM as a foundation come customer. Congrats on that announcement in December. You outlined Ryan, I think like the size of the price in terms of EBITDA with I think Stage 2 and Stage 3 up and running at $1 billion. How do we think about sort of the pricing involved for and fabricated magnets are these going to be on fixed price contracts where you can just earn back a margin on the hundreds of millions of dollars you’re spending on the plant? Or will there be some variability in the pricing with GM?

What I’d say on that is, we certainly are not going to get into the specifics of our agreement with General Motors. But I would say take sort of Jim’s adage that he said many times that, that we firmly believe is we’re not going to rob Peter to pay Paul. So we’re not going to enter into an agreement on the magnetic side then in any way prevents us from earning a market price on our material in the upstream business. And so I think the very exciting thing about what we’re seeing develop in terms of the demand domestically and across globally ex-China, frankly, is a willingness for customers to look at the value you that they get from the rare earth and the rare earth magnetics, that, that we are going to provide and understand and are willing to pay a fair price and allow us to earn what we believe. It is a very healthy margin and return on capital to pursue this opportunity. And so it allows us to continue to benefit from what we all see as very exciting supply demand dynamics from a pricing standpoint on the upstream business, but then be able continue to move downstream methodically capture, what we think our nice high returns on capital and continue to morph the business into something that adds an additional technological component to it. It adds some smoothing of volatility to it. And so frankly, the reason we’re so excited about this is, the market has really come our way from that perspective. And so we’re excited about the opportunity.

Indeed. Thanks, Ryan.

And I would just add on that, yeah, it’s hard for us to, don’t expect us to give out economics of any specific customer in the future, as you can imagine. But I do think it’s just worth repeating when you think about the way world is headed and I think we were – we sort of highlighted this over the past year with the semiconductor issue and now in sort of the very serious situation that we see on our televisions today with Russia, Ukraine, I mean, what would a company or country pay to have some diversity in their natural gas from Russia, right? What would they pay to have some diversity in their semiconductors? And so you’re seeing this theme kind of across the Board of people recognizing that as the world economy evolves here, the ability to have a fully integrated offering to a customer has a lot of strategic value. And there are – it is a difficult thing to create. And so we really think that our franchise sort of provides that opportunity and obviously the foundational deal is suggestive of that and we expect to have a number of customers like that in the future. And so again, I would just highlight that the we believe that we will be able to get the economics of our Stage 2 business and then earn attractive returns on capital in our Stage 3 business that will add additional total dollars, which obviously is just grows enterprise value. And so from every indication that we see as we talk to people day to day that, that, thesis, if you will remains intact and is growing by the day.

Thanks, Jim.

Sure.

Thank you. Our next question is from Ben Kallo from Baird. Ben, your line is open. Please go ahead.

Hi everyone, this is George Gianarikas actually. Good evening.

Hey George.

I had a couple of questions. First on the heavies. Can you help us quantify what the opportunity looks like there and from a revenue perspective?

Well, I would just say high level, we expect to consume all of our are heavies into our magnetics business. So it wouldn’t be a separate – yeah, it wouldn’t be a separate item.

Okay. And next with regard to…

And maybe to clarify go ahead Michael, go ahead. Michael – wait, go ahead, Michael. I think you want to add into that.

The dysprosium and terbium from our SEG+ that we’ve previously reported that would be fed into the magnetics business. Those represent the vast majority of the value. I just wanted to clarify that point.

Got it. And then…

Thanks, Michael.

…you gave out some numbers the $450 million to $500 million and the $900 million to $1 billion and EBITDA. Those Stage 1 and Stage 2 numbers, I just wanted to make sure I understood. I heard those correctly.

Yes, sure, George.

Go ahead, Ryan.

Yes. So what would you said is if you take current spot of NdPr, our expectation is if you run rated Stage 1 or current business, that was the first number of the $450 million to $500 million. If you look at what we expect to be able to earn with current market pricing and all the caveats that come with that, current cost structure and all those sorts of things that we expect. The $900 million to $1 billion was with us fully ramped on Stage 2 and with the initial Fort Worth magnetic facility ramp.

Understood. And that $450 million to $500 million assumes 42,000 metric tons, so production similar to this year?

We haven’t gotten into the specifics of that. And we tried to make clear it’s not meant to be calendar year 2022 guidance, obviously given, taking today’s spot price.

Yes.

Its not necessarily indicative, but we haven’t gotten into the specifics other than, I certainly share Michael sentiments on his discussion earlier on how we would triangulate around our anticipated production for the year.

Okay. And so given that set of metrics, the $700 million that you’ve articulated is funded through the business for the most part. And could you help us understand a little bit about the financing needs of the business over the next two, three years?

Yes. Well, I mean I can take that. You can look at our balance sheet right now, we have a little under $500 million in net cash, right? We have $1.2 billion approximately in gross cash. So, and if you look at the run rate of the business, look at, take that this quarter, if you want, obviously prices have moved materially since Q4, which is what we reported today. But pick your number in between. And I think if you look at the cash flow that we’re generating and do that math, you can see that we believe we’ll be able to fund all of this with our net cash position. So, we feel very comfortable with the balance sheet and we want to maintain a Fortress balance sheet because we – and I said this in my remarks earlier. When you’re in a business with volatility, you want to make sure that you can absorb volatility. But you also in times of volatility want to be able to be opportunistic. And I think that our balance sheet and our investment program and where we see the state of the business today affords us that we can do all of those things.

Understood. Thanks guys.

Yes.

Thank you. Our next question is from Carlos De Alba from Morgan Stanley. Carlos, line is open. Please go ahead.

Right. Thank you very much, everyone. So first question is, do you envision that for stage three, the current Mountain Pass deposit and the heavies that you have there combined with the recycle production that you will generate would be enough to support your – at least your first plant of magnetics plant or you expect that potentially you need to buy from third parties?

Well, Carlos, I think, it would be fair to say that you should assume that we would not go do business that we didn’t think we could deliver on. So I think you can make your conclusion that we believe we’ll be able to provide the heavies that we need.

But not necessarily from your deposit?

Oh, yes. From our deposit with the initial facility, yes, obviously as we scale beyond that, it’s a different question, but we do believe that we’ll be able to provide from our existing deposit, yes.

All right. Great. And then the other point, I don’t know if it is for you Jim or Michael. What stage of completion is the stage two project right now, and how did you see the progress throughout the year? I mean, basically it seems from the commentary that we should expect only really to start late in Q4 and then have a sort of gradual ramp up in 2023 until you reach full capacity at some point in 2023, right?

Yes. I think that as I said in the prepared remarks Carlos, we expect to be mechanically complete a bit later this year, and sometime in 2023, we will be heading runway production. This past quarter was what’s going on in the world. It was a little slower than we would’ve liked, but we’re progressing forward. And trying to execute this as quickly as we possibly can.

All right. And final question is in terms of the cash flow generation, so once the offtake agreement is done you guys will be – you will like basically have a step up in your cash from operations that you show in your financials, right?

Yes Ryan. Go ahead, Ryan.

That’s – yes, that’s exactly right. If you look at the cash flow waterfall that we provide over the course of the year in the current offtake arrangement, we obviously pay down with each sale. And so, going forward with the offtake complete, if you just take last year’s numbers from an operating cash flow perspective, we’d have a step up of about $55 million in operating cash flow purely from transitioning away from the prepaid offtake arrangement.

All right. Excellent. And if I may squeeze last one Ryan since you were talking about cash flow generation, we’re talking about cash flow generation, how should we think about working capital particularly receivables for the quarter? I guess it depends on the sequencing of your – of the shipments, but how’s it going so far? Is it this smooth quarter, and maybe you can’t reduce by the quarter end, the amount of receivables that you holding your balance sheet?

Yes, it’s a great question, Carlos. I’ll refer you back to my remarks on sort of the pace of shipping in Q4, which was sort of a repeat of Q3 and even a bit crazier. So far what we’ve seen is encouraging in terms of how the port is operating in our ability to get product out the door. I’d never in this environment want to make a hard prediction on timing of shipments, but I would say that the improvement that we saw towards the tail end of Q4 so far has continued.

All right. Excellent. Thank you very much guys.

Thanks.

Thank you. Our next question is from Lawson Winder from Bank of America. Lawson, your line is open. Please go ahead.

Hi, guys. Good evening and thank you for the presentation and also congratulations on the free money from the government. That’s never a bad thing. I just wanted to ask about the $500 million of incremental EBITDA that you spoke to on the call. So it would seem to me that the vast majority of that would likely be from the separation facility, both the combination of the light and heavy rare earth. Am I thinking about that correctly? Is the bulk of that being from that? Or is there going to be a significant portion coming from this magnetics facility?

So, Lawson, that was another creative way of asking the same question, but we haven’t broken that out. But, Ryan, if you want to address that, you may go ahead.

Yes. I mean, look, obviously just given the scale of the upstream versus the downstream, majority of the portion would be coming from two including lights and heavies. I think, we’ve given – I’d refer you back to some of our prior commentary to try to triangulate around what our expectations are from a production cost perspective. And so, you can do that math and think about what are the potential volumes that we’ve talked about in Stage II. We told you that we were referencing that number at today’s spot. And if you do that math, you do get a very attractive return on capital for the magnetics business. And so, I think, there are a lot of moving parts that go into that math, but I think we’ve given you guys hopefully the pieces to be able to do it and just given as we talked about a little bit earlier. We don’t want to get into the specific economics of any one customer’s arrangement. We don’t want to get much more detail than that, but hopefully that’s helpful.

Yes, that is helpful color. Also could I ask about sort of the timeline on all of the moving parts here, so – and I’m just trying to understand Stage II. So when Stage II starts up towards the end of 2022, is it going to be a startup for both the lights and the heavies, or should we think about it as being Stage II starting up for the lights and then a possible future shutdown to tie-in the heavies?

Michael, do you want to – why don’t you go ahead and take that.

Yes, that’s a good question. When we start up the lights, one of the products that we’ve shown on the chart is the SEG+ concentrate. So that is a product that we had originally planned to sell. And now we’ll probably stock pilot, but we won’t start up with the heavy rare earth separation facility until later date, more coinciding with the startup of the magnetics production in Stage III. We would hope to start up slightly earlier for heavies, but no – certainly not with Stage II. So, we’ll be running Stage II, normalizing that operation and preparing for tie-ins for Stage – for the heavy rare earth separation.

Okay. That’s clear. And then how should we think about how disruptive the tie-ins of the heavies would be well actually both the heavies and the sort of recycling and – recycle material handling angle of that?

Michael, go ahead.

I think, yes, we would say the primary thing is whether we have to do any facilitating investments to ensure smooth handling or any pre-processing of any third – additional material, third-party material, recycled material into our circuit. I wouldn’t expect a hugely disruptive impact, but there will be periodic impact. And then the throughput potentially could be modestly impacted for short periods of time while that normalizes, but they are discrete in many cases. And so the disruption wouldn’t be lengthy for the most part.

Yes, that’s super helpful. And then just finally, I wanted to ask a question or perhaps two on the updated reserve obviously and an additional 11 years is really exciting, especially if the price of NdPr keeps rising. But what I wanted to understand is with the lower grade material that is coming into the mine plan now, does that start into the mine plan in the near-term? Or is this something that’s going to be back end loaded?

Yeah, I’m happy to take that. The way we’ve built out the mine plan is that, over time the grade will continue to sort of average down if you will. It’s not sort of a stair step in any way. And the way that we’ve built out to this mine life obviously is with an assumption is as you see head grade, come down, you have the obvious impacts on recovery throughout the mill. I think what we see is very conservative assumptions in the report about how that how that will come to pass. And certainly with some of the comments I made earlier about our ability to look at potential upstream technologies and new processes to look at some of the lower grade material, I think those things would also translate very well into our ability to continue to maintain and grow recoveries, even with a lower average head grade coming into the mill over time. And so obviously, when you look at the reserve slide, you see the difference between the contained REO. If you look though at recoverable REO versus contained REO the increases is almost the same. And so I think 25% versus 28% that you’ll see in the report and so. There really is not nothing super meaningful there, and particularly with the investments we intend to make we feel very good about multi-decade ability to continue to improve.

Okay. That’s extremely helpful. And then with the estimated distribution of TREO content that you guys had previously disclosed, so with this updated reserve estimate, does that change at all?

No, it does not change meaningfully. The distribution – you’ll see when we file the distribution that we see coming out of our con product today has been quite stable. The way the reserve report was put together certainly with the primarily light rare earth ore body was focused on the light rare earth content. And so I think we have an ability particularly now that we’ve got real plans in place at this point that had developed and accelerated towards the end of 2021. Whereas, this report is actually an effective data of Q3 and then depleted to the end of the year. I think an opportunity for us absolutely going forward is to invest some more time in incorporating better the heavy rare earth portion into the reserves. I don’t Mike, if you have any other thoughts on that on distribution over time.

No, you hit on it. I think that the natural distribution has been very stable over very long periods of time, going back decades.

Right. That’s super helpful. If I could just fit in one more question on the SEG+ 1.7% of the total TREO content, what percent of that 1.7% is DY and TB?

We haven’t disclosed that. I think we would prefer not to other than referring back to Jim’s comment about being sufficient to handle our initial commitments for the Stage I – for the Stage III facility.

Okay. That’s fair.

Thank you.

Thanks very much.

Thank you. We have time for one more question, and that is from Laurence Alexander from Jefferies. Laurence your line is open. Please go ahead.

Choice is choices. But thanks for putting me in. Can you just flash out your thinking about recycling, I mean, any incremental color you can give us now that you’ve been, as you say, pursuing multiple tracks at the same time, in terms of potential CapEx over the next few years? How the margin structure might compare with the Stage II, Stage II. Just can you give some thoughts on how that’s going to fit into the mosaic?

Well, I would say on the CapEx, I would just refer you back obviously to the statements Ryan made in the prepared remarks, just because we’re not going to break out any of these specific parallel investments. We want to make sure that we guide you to an overall CapEx figure. But Michael, if you want to address sort of have any thoughts on recycling and kind of how you see it integrating with the operation. Go ahead.

Sure. Yes, I think there’s two parts and they’re similar but slightly different. The one is the process waste that would come off of magnetics plant, which – some of which could be recycled within the magnetic operation itself in the Stage III, and some of which would come back to Mountain Pass to be separated. And the other would be end of life magnets. We’ve done a lot of our work on end of life magnets in terms of digesting them, removing iron and boron and other things and producing separated oxides. You could see it as, and probably the most efficient would be to leverage the existing assets in this existing infrastructure, which largely can handle all of these processes. There could be certain customers who may want purely recycled material that doesn’t interact, which would have different economics. And we’d have to evaluate whether that’s attractive or not. But I think the attractive thing for Mountain Pass is leveraging existing processes, which too essentially the exact same thing that magnet recycling requires. But having material that has fewer complex impurities and larger separation factors between the elements given that they have in the rare generally – turbine disposing maybe very, very trace amounts of others. But it makes it a simpler separation.

Thank you.

Okay. Yes.

Thank you. This is all the questions we have time for today. So I’ll hand back over to Jim for any closing remarks.

Okay. Thank you, operator. And I just wanted to thank everyone. I know it was a long call today, but we obviously have had a lot of exciting things to report to you. So thank you for your time today. And we look forward to future updates. Have a good night, everyone.

Thank you everyone for joining today’s call. You may now disconnect your lines and have a lovely day.